People: at the Epicenter of Risk.

Human Capital Risk

Hedge Fund and Private Equity Managers

A recently launched hedge fund required investors to “lock up” their capital for a 5-year period. The fund received over a billion dollars while the management fees were in excess of $10 million annually. The hedge fund manager was crucial to the success of the company and investors had concerns should he become unable to manage their investments. A reducing key person disability policy was designed which began at $50,000,000 at inception and was then reduced by $10,000,000 annually until the conclusion of the ‘lock-up’ period. This assured that the management income was protected and enhanced the funds ability to sustain continuity.

A wealthy hedge fund manager was cycling through Connecticut when he was struck by a car while trying to avoid an object in the road. His spinal cord was severed, leaving him permanently paralyzed. He was confined to a wheelchair and unable to work at the job that had once earned him millions in compensation. He was also married with four children. The loss to the manager’s personal earnings has been estimated to be at least $18 million dollars. He lost his lawsuit and did not have disability income protection. He has no foreseeable way to recoup his previous earnings.

A much happier result occurred when a Private Equity Firm required an immediate solution to protect the portfolio company’s CEO in the event of a death or disability. They were in the process of closing an important acquisition and this could have been a point of contention. In a matter of hours, they were bound for $20 million of life and disability for 30 days while traditional underwriting took place. This assured that there were no delays in the business venture.

Hedge Fund managers rely on their unique skill set and knowledge to make the right investment choices. An unexpected disability striking a high caliber manager often results in a catastrophic loss to the funds being managed as well as the manager’s personal wealth. We understand that Hedge Fund managers require unique solutions when it comes to protecting their wealth and prosperity. We provide specialized products to suit those needs while understanding the security and confidence that comes with our Lloyds of London partnership.

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Disclaimer: Global Wealth Partners, Inc. is a branch office of DFPG Investments, Inc. Registered Representatives offering Securities and Investment Advisory Services through DFPG Investments Inc., a Registered Broker/Dealer Member FINRA / SIPC. This site is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security, which may be referenced herein. We suggest that you consult with your financial or tax advisor with regard to your individual situation. This site has been published in the United States for residents of the United States. Persons mentioned in this site may only transact business in states in which they have been properly registered or are exempt from registration. | View General Privacy Policy